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FAQ: The basics of the Microsoft trial

After more than 18 months in and out of the courts, it may be getting a little tough to keep track of the Micosoft antitrust trial.

    After more than 18 months in and out of the courts, it may be getting a little tough to keep track of the Microsoft antitrust trial. Here are the basics:

    When did the case start?
    The Justice Department (DOJ) and 20 states--one later dropped out--filed the case nearly two years ago, on May 18, 1998. The trial commenced on Oct. 20, 1998 and ended Sept. 21, 1999, after 76 days of testimony.

    What is the case about?
    There are four basic claims in the government's case: that Microsoft illegally maintained a monopoly in operating systems; that it leveraged that monopoly into the browser market and illegally tied Internet Explorer to Windows; that it dictated "boot-up" restrictions to PC makers; and that the company entered into prohibitive and exclusive agreements with Internet service providers.

    Are some claims more important than others?
    Under antitrust law, it is not necessarily illegal to be a monopoly. But using that power in anti-competitive way, such as withholding essential products or raising prices arbitrarily, can violate antitrust law. The government strove to prove Microsoft used some of these tactics to preserve its Windows franchise. Another argument--that Microsoft illegal tied, or bundled, Internet Explorer with Windows--has been a highly contentious issue.

    Why is the tying claim so important?
    It hits at the heart of Microsoft's business practices and its ability to add new features to Windows. Microsoft argues it has a right to add features at will, while the government contends that the additions make it nearly impossible for companies selling stand-alone products to compete. In turn, this hurts consumers because a lack of competition keeps prices artificially high.

    The judge issued another document, the findings of fact. How is that different from this ruling?
    Jackson issued the findings of fact on Nov. 5, giving the government and Microsoft its first hint of things to come. The judge's findings are essentially his distillation of what was true, based on plaintiff and defendant presentations. The findings of fact are similar to deliberations where a jury figures out what is true before reaching its verdict. Jackson's ruling, called the conclusions of law, is the application of law to the findings of fact.

    What was yesterday's ruling?
    Jackson concluded that Microsoft violated antitrust laws by leveraging its monopoly position in operating systems to capture the market for Web browsers. Microsoft used anti-competitive means to do this, such as combining Internet Explorer with Windows, violating two sections of the 1890 Sherman Act.

    What happens now that the judge has ruled?
    Jackson will next call for remedy hearings, where the DOJ, states and Microsoft will recommend what should be done about the antitrust violations. The government could ask for a "structural" remedy, which could mean breaking up Microsoft, or a "conduct" remedy that would restrict its business practices. Third parties, among them Microsoft competitors, could pipe in with their own recommendations.

    How long will remedy hearings take?
    The hearings are likely to take place over three months--longer if Jackson explores breaking up Microsoft. Afterward, he will issue his final ruling, which will include remedies to Microsoft's antitrust violations.

    Will Microsoft appeal Jackson's ruling?
    Yes. Microsoft has said it will request an expedited appeal that could put the case before the U.S. District Court of Appeals for the District of Columbia by the end of the year. Jackson could also petition the Supreme Court to take the case directly. If that happens, the appeal could be over in as little as a year. Otherwise, it will take about 24 months.

    The case has been about Windows. Will remedies affect other Microsoft products?
    Almost certainly. The government will be looking to restore competition in other areas and in future markets. It could restrict how Microsoft sells Office 2000, which has benefited from the operating system monopoly. Because Microsoft dominates other software markets, the government could, for example, ask Microsoft to develop Word 2000 for alternative operating systems, such as Linux.

    How could the ruling affect Microsoft's business?
    In the short term, there will be no immediate impact on Microsoft or how it conducts its business. The judge, however, could impose temporary restrictions on Microsoft while the case is appealed. If not, there would be no real effect until after the Supreme Court hears the case.

    Will the ruling have any immediate impact on consumers?
    No. Any final ruling by the court would be designed to restore competition and spur innovation. Consumers might eventually have more choice of products, but until now the government has not asked for monetary damages for consumers. But related civil class-action suits could benefit some consumers.

    Are there many of these class-action lawsuits?
    There are currently about 115 class-action suits pending against Microsoft, most filed after Jackson issued his findings of fact. Once Jackson issues his final ruling, some of these cases will be able to use the bulk of the government's case to legitimize their claims. But the majority face an uphill climb as only a handful of states, such as California, let third parties sue in these kinds of lawsuits. Because most people buy Windows on PCs and not directly from Microsoft, they cannot sue directly in most states.

    Which states are involved in the case?
    California, Connecticut, Florida, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Missouri, Minnesota, North Carolina, New Mexico, New York, Ohio, Utah, West Virginia, Wisconsin and the District of Columbia.